Rug Suppliers Upscale the Outdoors
January 14, 2008,
At $79 to $99 a pop at retail on average, an indoor/outdoor rug is probably one of the more resilient soft floor coverings out in the marketplace during these otherwise trying economic times — and the time to trade up may be at hand.
This emerging and growing segment of the rug industry has weathered the many storms — high petroleum prices, the dollar devaluation and the soft housing market, among others — that in the last year have caused category players much pain in their pocketbooks.
And while it is true that the vast majority of indoor/outdoor rugs are made of oil-based synthetic fibers, all of which have repeatedly experienced price increases in 2007 and 2006, growing shelf space spurred by quick turns at retail have helped compensate.
The inherent qualities of polypropylene and other synthetic fibers — including resistance in most cases to water, mildew, staining, fading and overall durability — explains the extensive use of these fibers among suppliers despite the high materials cost. Their natural fiber counterparts like coir, jute and sisal, for example, can't compete given their organic attributes — non-resistance to mildew, wear, water, fading and other harsh conditions associated with exposure to the elements.
Outdoor rugs first started hitting the market scene in force in early 2004 from several major players like Couristan and 828 International Trading Co. Since then, it's hard to find a supplier not offering some variety of this product.
"The outdoor rug business has been doing pretty well," noted Mike Riley, president of Oriental Weavers USA, a major manufacturer that supplies its wares to other companies but does not itself distribute them in the United States. "It's lasted a lot longer than we thought it would at the beginning. Right now, it's a stronger business than the normal, average area rugs."
Based on the 2006 Universe Study Casual Living report, published in November by HTT parent Reed Business Information, the outdoor furnishings market was $5.8 billion in 2007, up 4.4% from the prior year. This segment includes grills, outdoor dining sets, outdoor lighting, lounge chairs/chaises, related furniture and umbrellas.
While the report excludes rugs, the products that are part of the study correlate with soft flooring and other decorative accessories. If consumers are cooking and dining outside, they are moving their lifestyles outdoors as well, prompting sales of decorative merchandise like rugs to make these au natural living spaces more comfortable.
Capel Rugs' vp of sales, Allen Robertson, attests to this assumption. "Outdoor rugs are still a grand business, growing steadily 10% to 20%, almost nonstop," Robertson said. "It's very healthy. A plus is that it's a new-category customer coming on scene, so you've got new distribution and new consumers."
Suppliers tend to pursue opening and promotional price point products that hit the key $59, $79, $99 and $129 retail tickets popular among discount department stores, warehouse clubs, closeout chains, home centers and even some high-tier stores in the furniture and flooring channels.
But more and more rug companies are looking to diversify their assortments with added colors, designs that branch out of the usual garden variety patterns and more sophisticated constructions — all with the intention of demanding a higher price point.
More recently higher-bracket distribution channels like home specialty chains have joined the outdoor rug bandwagon. Last week, Bed Bath & Beyond offered on its website a polypropylene basketweave-like style outdoor rug for $149 in a roughly 8-by-11 size.
Macy's.com starts its outdoor accent rugs at $39 for Couristan's synthetic Recife and goes as high as $639 for an 8-by-11 polypropylene piece in an elaborate mosaic pattern by designer Liora Manné.
Within that kind of business, "the higher end stuff," Hellenic Rug Imports sees its next opportunities knocking, explained president Steve Mazarakis. The company is bringing 20 new styles to market "that have more color and intricate designs." New constructions by Hellenic's include hand tufted polypropylene, made in China, "like a hooked rug and very good looking," Mazarakis added. These pieces are set to retail for $199 for a 5-by-8.
Mazarakis said he is not bringing more promotional outdoor rugs to his assortment because "the lower end side has been over-served. It's everywhere. So instead, we're coming up with new concepts."
Couristan, too, is building its program, but is sticking to the popular, more promotional varieties. Its Five Seasons collection comes in seven patterns, most of them beach and lakefront in theme. Made of heat-set polypropylene, these rugs can retail for $99 for a 6-by-9.
"We're growing our outdoor business because it is a growing business," reasoned Larry Mahurter, director of advertising/sales promotion. "We're heavily advertising this year in shelter publications, doubling the amount of dollars allocated."
Couristan is also offering a small merchandising display box for its ongoing Recife collection and the company has designed a 30-page outdoor living-themed catalog that features these rugs as well as wall-to-wall carpeting.
The $99 5-by-8 is also the route being taken by Milliken Rugs. The company got its "feet wet" last year with outdoor rugs, "and what we did played out well at retail," said Rob Beistline, market manager for area rugs. For market, the company is including outdoor styles in its new Don Sawyer and Guy Harvey collections and its novelty rug offerings, namely its National Football League and collegiate football rugs.
"There are more avenues now for people to use outdoor rugs," Beistline said. "It's not just for the patio and porches. People can tailgate with them, put them in their RVs, and on and on. We think it's a great product for a sports fan."